A Company That Foregoes a Discount of 1/7 Net 30

question 77

Multiple Choice

A company that foregoes a discount of 1/7 net 30 is essentially borrowing money from the vendor at

• A) 1%.
• B) 12.29%.
• C) 16.03%.
• D) 52.7%.

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Definitions:

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is received or paid out.

Sales Adjusted

The net sales figure after deductions such as returns, allowances, and discounts have been accounted for.

Cash Basis

An accounting method that recognizes revenues and expenses only when cash is exchanged.

Cash Basis

An accounting method where revenues and expenses are recorded only when cash is received or paid, regardless of when the transactions occurred.